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One insurer source said that putting Groupama’s insurance business into run-off was a good idea because of the relative lack of interest in this part of the business from bidders.

As much of Groupama’s UK business is tied up in schemes and deals, there is relatively little on the open market to entice bidders, the source said.

“I certainly do think it’s likely to go into run-off,” said the source. “No one looks like they want to buy Groupama’s UK operations, and it looks like the French don’t want to stay.

“If no one’s going to pay them any money, putting it into run-off is not an unreasonable proposition. Many of us thought that’s where it would be eventually.”

OIM income boost

OIM controls a total of about £200m in premium income, as an MGA distributing capacity to broker schemes and specialist business around the UK.

If OIM were to merge with the remains of Groupama’s business, it could boost the premium income it controls to around the £500m mark.

It is almost certain that the highly rated chief executive of OIM, Sian Fisher, would head up the newly merged operation.

Gallagher is competing with four other companies interested in buying all of Groupama’s UK operation. One of those is Acromas, parent company of AA Insurance and Saga.

Buying Groupama would suit Acromas well, as the insurer’s private motor book would be a good fit for Acromas’s acquisition of AA Insurance.

The main bidders for the underwriting side include private equity firms JC Flowers and Charterhouse.

Management buy-outs

Meanwhile, Budget Group is the latest bidder to enter the competition to buy the brokers.

Bollington and Lark, however, still want to carry out management buy-outs, with private equity firm Gresham backing Bollington and an unnamed insurer backing Lark.

Groupama originally wanted to sell all its brokers as a unit, but is understood to be warming to the idea of individual sales. Previous insurer bidders, such as Allianz, AXA and Aviva, are believed to have dropped out of the contest.

Groupama decided to sell its UK insurance operations at the end of last year because it was hit by the eurozone crisis.

The company’s 2011 results, published in March, showed that while the eurozone crisis triggered a €1.8bn (£1.5bn) loss last year, the UK’s revenues remained steady.

Meanwhile, premium income decreased marginally by 3.2%, resulting in an overall premium income of €525m in 2011.Groupama UK made a combined operating ratio of 98% in 2011.